Top SEC lawyer on 'Fabulous Fab' trial to depart agency

WASHINGTON, Sept 27 Fri Sep 27, 2013 5:53pm EDT

WASHINGTON, Sept 27 (Reuters) - Matthew Martens, the top trial lawyer at the U.S. Securities and Exchange Commission who led the agency to victory in its blockbuster civil fraud case against Goldman Sachs Vice President Fabrice Tourre, is leaving the SEC at the end of September.

The SEC said its current deputy chief litigation counsel, Matthew Solomon, will take over the top position.

The SEC's case against Tourre was one of the most high-profile matters to emerge out of the 2007-2009 financial crisis. At the heart of the SEC's case was whether Tourre had misled investors in a synthetic collateralized debt obligation (CDO) called Abacus 2007-AC1.

The SEC said Tourre, who once referred to himself as "the fabulous Fab" in an email, should have let investors know that Paulson & Co Inc, the hedge fund run by billionaire John Paulson, had helped choose the subprime mortgage securities underlying the CDO and was betting against it.

Leading up to the trial against Tourre, many critics openly questioned the strength of the SEC's case, saying the agency was wrong to target a low-level Goldman employee.

Goldman Sachs had previously settled the matter with the SEC for $550 million; no high-level executives were charged in the case.

Martens was able to convince a jury that Tourre was liable for fraud, marking what most consider to be the highlight of his three years working at the SEC.

Martens' plans to leave the SEC this fall were widely expected.

Reuters first reported in May, well before the Tourre trial began, that Martens was testing the waters for prospective employment at several law firms

At that time, he was inquiring internally about whether certain firms including Kirkland & Ellis; Paul, Weiss, Rifkind, Wharton & Garrison; WilmerHale; Latham & Watkins, and Cleary Gottlieb Steen & Hamilton were representing clients in SEC cases.

In some instances, Martens recused himself from working on those cases in order to comply with strict ethics rules that prevent employees from working on matters involving prospective employers.

The SEC's announcement on Friday did not say where Martens plans to go next. Martens could not be immediately reached for comment.

Solomon has served as second in command in the SEC's trial unit since June 2012.

Before working at the SEC, Solomon was a federal prosecutor for more than 10 years.